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Exchange Traded Derivatives (ETD) worldwide increased in 2011, according to statistics compiled by the World Federation of Exchanges (WFE).
The WFE, which annually conducts a survey on derivative markets, found that in 2011, more than 24 billion derivative contracts (11.9 billion futures and 12.9 billion options) were traded on exchanges worldwide - an increase from the 22 billion traded in 2010. Between 2006 and 2011, the number of traded derivative contracts has more than doubled. While the growth rate (+11%) remains significantly high, it is lower than the one observed in 2010 (+25%). The full WFE report on derivatives markets will be available following the annual IOMA conference held this year in London from 15 to 17 April 2012.
“This increase in volumes seems logical given the high volatility of markets in 2011, which may have driven the need for hedging upwards. The relative preference for derivatives built on underlying indices or ETFs, as compared to single stocks, could also factor into the increase” said Jorge Alegria, Chief Executive Officer of MexDer, the Mexican Derivatives Exchange and IOMA Chairman, who is leading IOMA’s network of senior executives from the options and futures exchanges for the next two years.
Source: World Federation of Exchanges
Other highlights of the preliminary WFE derivatives report regarding exchange traded derivatives (ETD):
- Equity derivatives: The +14% growth in equity derivatives was driven by index and ETF derivatives, which increased much faster (+19%) than single stock derivatives (+5%).
- Interest rate derivatives: Interest rates derivatives continued to grow in 2011 (+9%) overcoming difficult environments in some regions with low interest rates, no economic growth and credit expansion.
- Currency derivatives: The highest growth rate in 2011 (+16%) was seen by currency derivatives, which overcame the commodity derivatives market in terms of number of traded contracts. This important growth was primarily driven by currency options traded on the National Stock Exchange of India since October 29, 2010. These contracts already represented 253 million trades in 2011. Although the growth rate of traded volumes in 2011 drops when the currency options traded in India are excluded from statistics (+6%), the number still remains significant.
- Commodity derivatives: The 34% decrease in volumes on Mainland Chinese Exchanges caused a global 6% decrease in commodity derivatives in 2011. When the figures from Mainland Chinese Exchanges are excluded, the 2011 global growth rate increased to +24%.
Volume and Growth Rate of Derivative Contracts Traded on Regulated Exchanges
*In billions of contracts
Source: WFE IOMA Survey – Including OTC trades registered on the exchanges
For the second consecutive year, the WFE gathered statistics from clearinghouses. In these statistics, there is a distinction made between Exchange Traded Derivatives (ETD) and OTC trades cleared by a CCP:
- Equity derivatives: Clearing services for OTC trades are only significant in the EAME geographical region. In this space, OTC trades accounted for 32% of the traded volumes in 2011 and decreased by 1.4%, whereas total exchanges volumes for equity derivatives increased by 11%.
- Interest rate derivatives: The amount of open interest for interest rate swaps increased in 2011, but decreased for ETD.
- Commodity derivatives: Volumes of OTC cleared contracts are significant on two Exchanges, namely CME Group and ICE. In regard to CME Group, the number of OTC commodity derivatives cleared contracts in 2011 increased more slowly (+2%) than on-exchange traded contracts (+12%).
- Credit Default Swaps: In 2011, the total notional outstanding amounts of CDS cleared by ICE Trust in the US and ICE Clear Europe increased by 32%.
Detailed results are available on WFE website http://www.world-exchanges.org/files/focus/pdf/focus_february.pdf
